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Portugal to re-elect president, boost for reforms

Portugal was poised to re-elect President Anibal Cavaco Silva on Sunday in a vote expected to reinforce the country’s determination to cut its budget deficit and avoid an international bailout.

The presidency is a mostly ceremonial post but the election comes at a time when Portugal is at the centre of the euro-zone debt crisis and many economists expect it to seek debt relief.

The latest polls show Cavaco Silva, of the opposition Social Democrats, getting an overwhelming 60 percent of the vote against 20 percent for his closest rival, Manuel Alegre of the ruling Socialists.

Although his party is in opposition, Cavaco Silva’s re-election would provide a much needed boost for the minority Socialist government of Prime Minister Jose Socrates.

In recent months, the president has provided crucial support to government efforts to push through spending cuts and tax hikes in order to avoid taking a bailout like Ireland and Greece.

“I would expect that Cavaco Silva and the Socialists to maintain the habit of institutional stability, that is the tradition,” Adelino Maltez, a political analyst at Lisbon University, said.

Because the Socialists are a minority in parliament, efforts to obtain support for spending cuts are closely watched by investors.

Socrates won backing from the Social Democrats for this year’s budget, which will cut civil servants’ wages by five percent and introduce across-the-board tax hikes, partly through Cavaco Silva nudging his own party to provide support.

The government has promised Brussels to cut the budget deficit to 4.6 percent of gross domestic product this year from 7.3 percent last year. Many economists expect that to tip the country back into recession after 1.3 percent growth in 2010.

Avoiding an international bailout has been a big issue in the election campaign but because the prime minister runs the government the impact of the election is limited.

That may explain why turnout is expected to be low, and because the vote comes at a time when many Portuguese face increasing austerity with lower salaries and higher taxes.

While many economists expect Portugal to come under growing pressure to seek a bailout the country has been successful in selling bonds and treasury bills in the past two weeks, with investors demanding lower rates to buy its debts.